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Consumers have bought more than 11 million internet-connected Vizio televisions since 2010. But according to a complaint filed by the FTC and the New Jersey Attorney General, consumers didn’t know that while they were watching their TVs, Vizio was watching them. The lawsuit challenges the company’s tracking practices and offers insights into how established consumer protection principles apply to smart technology.

Starting in 2014, Vizio made TVs that automatically tracked what consumers were watching and transmitted that data back to its servers. Vizio even retrofitted older models by installing its tracking software remotely. All of this, the FTC and AG allege, was done without clearly telling consumers or getting their consent.

What did Vizio know about what was going on in the privacy of consumers’ homes? On a second-by-second basis, Vizio collected a selection of pixels on the screen that it matched to a database of TV, movie, and commercial content. What’s more, Vizio identified viewing data from cable or broadband service providers, set-top boxes, streaming devices, DVD players, and over-the-air broadcasts. Add it all up and Vizio captured as many as 100 billion data points each day from millions of TVs.

Vizio then turned that mountain of data into cash by selling consumers’ viewing histories to advertisers and others. And let’s be clear: We’re not talking about summary information about national viewing trends. According to the complaint, Vizio got personal. The company provided consumers’ IP addresses to data aggregators, who then matched the address with an individual consumer or household. Vizio’s contracts with third parties prohibited the re-identification of consumers and households by name, but allowed a host of other personal details – for example, sex, age, income, marital status, household size, education, and home ownership. And Vizio permitted these companies to track and target its consumers across devices.

That’s what Vizio was up to behind the screen, but what was the company telling consumers? Not much, according to the complaint.

Vizio put its tracking functionality behind a setting called “Smart Interactivity.” But the FTC and New Jersey AG say that the generic way the company described that feature – for example, “enables program offers and suggestions” – didn’t give consumers the necessary heads-up to know that Vizio was tracking their TV’s every flicker. (Oh, and the “Smart Interactivity” feature didn’t even provide the promised “program offers and suggestions.”)

The complaint alleges that Vizio engaged in unfair trade practices that violated the FTC Act and were unconscionable under New Jersey law. The complaint also alleges that Vizio failed to adequately disclose the nature of its “Smart Interactivity” feature and misled consumers with its generic name and description.

To settle the case, Vizio has agreed to stop unauthorized tracking, to prominently disclose its TV viewing collection practices, and to get consumers’ express consent before collecting and sharing viewing information. In addition, the company must delete most of the data it collected and put a privacy program in place that evaluates Vizio’s practices and its partners. The order also includes a $1.5 million payment to the FTC and an additional civil penalty to New Jersey for a total of $2.2 million.

Here are tips smart companies take from the latest law enforcement action involving smart products, which were also discussed at the FTC’s recent Smart TV workshop.

Explain your data collection practices up front. Tell consumers from the outset about the information you intend to collect. Ditch the tech talk and use easy-to-understand language. Especially when explaining new technologies or data collection people may not expect, transparency can be the key to customer loyalty.

Get consumers’ consent before you collect and share highly specific information about their entertainment preferences. If consumers wouldn’t expect you to be collecting information from them, especially sensitive information, make sure they consent to what you intend to do. The best way to accomplish that is to get their opt-in to the practice – in other words, to express their consent affirmatively.

Make it easy for consumers to exercise options. Would a function called “Smart Interactivity” that “enables program offers and suggestions” clue consumers in that everything they watch is being collected and shared with third parties? We don’t think so. Companies can hardly claim to offer consumers a choice if the tools necessary to exercise that choice are hard to find or hidden behind plain-vanilla descriptors.

At a minimum, they should be compensated for the invasion of their privacy, yes? If a marketer had gathered the same information by standing at their window with binoculars, that marketer would be behind bars now. So the FTC and the state of New Jersey each collect a hefty fine, but what of the consumers who were harmed by the practice? They receive nothing?

It would be nice to see a rule that fines levied for intentional deceptive behavior should be equal to or more than all proceeds gained by the behavior. if they earned more than they were fined, there is little motivation for the criminally inclined to become law-abiding. All profit motives need to be removed - the loss needs to outweigh the gain.

This particular instance of data mining by Vizio is but the tip of the iceberg. Corporate data mining is little more than a modern day, unregulated gold rush. And it's all happening under the radar. It could be swiftly brought to a halt if data miners like Google, Amazon, Facebook, and scores of other corporate data miners were required to pay for the data that they're presently getting for free. If data miners were required to pay copyright fees to those who produce the data in the same way that consumers have to pay corporations for their movies, music, games et al, this corporate thievery would end. There's a reason we aren't billed by the likes of Google, Facebook etc. It's because we're not their consumers, we're their product.

This is the absolute truth! I fear that most don't understand exactly what is going on here. I find it a bit scary that I am looking at faucets one day, buy one, and from then on ads for faucets are a constant pop up on my face book page for months. This is a great clue that facebook knows exactly what I am doing!

Why are the fines so small? The fines work out to a few dollars per violation. That's pathetic. And in the aggregate, it works out to only about 0.1% of VIZIO's revenue ($3.1B)! The fines amount to rounding errors for VIZIO. Clear violations of the law on this scale needs more than just paltry fines. The executives that approved this should be charged accordingly. And meaningful, perhaps even ruinous, fines should be applied. Only then will crap like this stop.

$2.2 million fine for 11 million TV's tracking and sending data. Are we serious about protecting privacy and enforcing our rules? Very weak, they surely made far more off of this ruse, this is a bad precedent and will not serve as any deterrent in the future. Epic fail FTC you had them and let them go!

Here's the thing. Who cares? Yes Vizio collected the data. Yes it was personally identifiable. No they didn't allow companies buying the data to personally identify anyone, and who cares even if they did?

I had a vizio tv installed by my property management company. Before long, my smart phone and computer any any device I brought into my dwelling was compromised. By the way, I lived in subsidized housing. Not saying it was the vizio, but I did find many things suspicious, and had the feeling I was being watched.

For so long as the penalties for such behavior are infinitely smaller than the revenues generated by the malfeasance, corporations will continue to bend us over a table. Thanks, FTC. Thanks for almost nothing.

If Vizio made money selling data that they should have not sold, why is the fine such a small amount, and not at least the entire amount they made by selling this data? How does this enforce the law? If I steal $5000 from a bank, would my penalty for that be $50? Why would I stop robbing banks? I have three Vizio TVs and I am now sorry about that.

Well you see because the pair of shoes being advertised to you will only be from Amazon and the Seller profile (say Nikes Amazon page) and nobody else.

Vizeo sold this data to millions of other companies for profit and still didn't suggest you the shoes you were looking at. Just took your browsing history and sold it, took your ip address and know your income and purchases now. As well now those companies they sold the data too will spam you with advertisements. So your little kid watching spongebob in the morning will now get advertisments from Porn companies or tobacco stores simply because you watched a rated R movie last night. That's the big issue here.

Your cookies and ads served up on a web browser aren't even close to the same thing. This is trackable directly to a physical address. This is also Vizio selling the data to a third party that can personally identify all sorts of other attributes. They also remotely (without permission or even asking) installed the tracking software on devices that never had it to begin with. It's also not people using the smart technology. People could be using the TV for nothing more then having it hooked up to a blu-ray/dvd player. The software that Vizio put on was spying on what movies you put in the dvd player and using that data to make money by providing nothing to you (no recommendations, no ads, nothing) but selling it to all sorts of third party companies. And the cookies and ads? You consent to their use by going to those websites and allowing the data to be collected. Vizio turned on the "Smart Interactivity" feature by default, didn't ask about it, and even went so far as to electronically break into tv's in people's homes and install the software silently and without any request for authorization. Comparing it to ads and cookies on websites is an apples and zebras comparison.

A very, very similar thing is going on with the Israeli company Similarweb -- look them up. They have build a $500m+ business on the basis of tracking millions of internet users with adware/spyware that installed in their browsers. They are selling this data for millions of dollars per year to the biggest interet companies -- Amazon and Ebay -- among others. If you ask, they will claim that all the users 'opted-in' to be tracked around the internet, but this is clearly bogus -- it's likely the vast majority of their 'users' don't even know they their browser or computer has tracking software installed. The FTC needs to up its game and go after the big boys who are really doing this kind of tracking on a big scale.

I have two Vizio TV's in my house. I love them. For the price and what you get, I'm happy. But doing this without the proper consent is wrong. I normally do allow companies to do this if they ask, I know they need to make money and if I get bombarded with ads for Star Trek and space and science related items, I'm ok with that. They just had to ask.

Vizio gets a slap on the wrist, go stand in the corner for punishment. Meanwhile the consumers our ISP and our privacy has been kidnapped and sold to the highest bidder, and receiving junk email, ads, and junk mail.

The government receives allotted money on penalities and what does the consumer receive after being violated?

How do we actually know we are not being watched? What proof do we have? How are we supposed to feel comfortable watching t.v. in our own house? I am really confused and disturbed by this.

Since a corporation can sue and be sued and held liable under both civil and criminal law, and because the corporation is legally considered a "person" it should be held liable to the same 'peeping tom' laws as you and I are held accountable to. The top executives within the corporation who benefited from this activity should face time behind bars.

What is wrong with the FCC???? 2.2M is NOTHING! Are you in bed with Vizio? ALL those PROFITS should be returned to start with, and then a VERY SIGNIFICANT fine to say to everyone out there "Don't you ever do this again". Additionally, Vizio needs to please GUILTY...othewise, take them to court! I think we need to see a CLASS ACTION LAWSUIT since our own Govt won't seek the proper justice. I think the decision makers on this issue at the FCC should be fired!

I own two Viizio televisions 50" for 2 years and a 42" for 5 years . My wonder here is where does this 2.2 million go ? What about us that had our device info stolen, they should at the least pay us back for the TV's . $1000.00 will shit me up this is only my first comment... more to come !!

Who does the FCC work for? Russia? 2.2M is chump change! AMERICANS DESERVE BETTER THAN THAT FCC! I am returning all my VIZIO TVs to Costco and demanding my money back! So sad when an American company blatantly steals personal data from the American public, and our own FCC won't deliver a stiff penalty. This is why we need Donald Trump to clean up the Govt!

I love how everything now-a-days needs to become a pro vs anti Trump argument. Like him or hate him. Voted for him or didn't. That does not matter. He's president of the United States of America. This article is about a ruling made by the FCC. They are currently under the direction of the Trump administration. This fine occurred under his term of office with his leadership in place. So, what's with the "This is why we need Trump" rhetoric? He's in office. Where's the cleanup that keeps getting mentioned? This was an opportunity squandered if that is really the goal of the Trump administration.

We bought a Vizio in Sept 2017. Our email account has been inundated with spam since about Nov. I'm talking about 20 - 30 junks mails a day! Plus my cell phone (used to register the tv) has been receiving a higher than usual amount of telemarketing calls. I changed my passwords and settings etc trying to figure out why, but now, I imagine this may have something to do with it. They should be held responsible for issues like that as well.

I can't help but wonder if this fine is coming out of the pockets of the new owners of the Vizio brand - the Chinese company Le Eco, who purchased the TV side of the brand for over $2 Billion OS - or the spin-off that owns and manages the data-mining software and technology that was installed on these TVs?

Le Eco has been very active recently in marketing their line of Smart TVs and Android Phones here in the US as a low-cost/high value brand and is now available thru Best Buy, Target and Amazon... but you find little to no information on what their plans are for the Vizio brand regarding service, support or the future of the brand itself. They also tout their own "User Experience" product under the EUI brand name, which leaves me to wonder if they'll be continuing this shady practice under the guise of a new company and brand label.

$3.7 million fine, plus or minus. Do you think VISIO cares? They made 10 times that selling the info they gathered. It's a slap on the wrist and a small one at that. These types of penalties wont change anything, it will probably embolden the rest to do the same.

Why is everyone acting so shocked? What, did you ever thing that Samsung was the only one using INTERNET CONNECTED TVs for thier own purposes? How ignorant do you have to be to bindly trust anything corporations do?? The selling of your information has been in the news for many many years. Dont ever think any corporation large or small ever has your best interest at heart. At the very least they see you as an item of their inventory. You make thhem money thats all. So be at piece with that or dont buy the tech. Simple as that. So, surprise, there is no recall on your Tvs is there? The methods and hardware they used is still there. Think it wont be used again? If anyone had your interest at heart, there would be a recaall, and refunds woukd be given. The lawyers themselves are making more than 3 million dollars. Please! Why isnt the program or hardware made public so that this could be prevented in other TVs or even other brands?? Why? Think about it. Being informed and taking protective steps when you are forewarned is your choice, but dont play the part of a naive and trusting fool. That doesnt prove anything but that you are a deaf and blind idiot.

So where do we sign for a class action suit since they made money off our personal data without our consent. We bought their product for our home enjoyment not for their enjoyment in the millions made off us.

FTC and government get this money that they fined Vizio. Where's customers' privately been invaded, get none money!? That's full of [deleted]. FTC and government should send out money to customers who bought Vizio! Since Vizio invaded our privacy!!! Greedy Government!! SMH!!!!

This was a know problem over a year ago yet Vizio or the FTC never notified the public of this envision of privacy. Vizio still doesn't post this violation or how to fix it on their website. I can imagine there's going to be a class-action lawsuit. Hold your receipt for another 10 years to show proof of purchase.

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